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Dollar Firm after Solid Job and Manufacturing Data, Selling Focus Turns to Sterling

Dollar remains generally firm today as supported by solid job and manufacturing data. Euro’s selloff seem to have temporary passed a near term climate and focuses turn to other major currencies. Australian Dollar suffer deep selling after job data, dragging New Zealand Dollar lower. Meanwhile, Yen is closing following as markets are deeply concerned with the economic and political of contagion of China’s Wuhan coronavirus. Sterling is not too far behind, partly thanks to the rebound in EUR/GBP after depending a key support level.

Technically, GBP/USD’s break of 1.2872 support suggests resumption of whole corrective fall from 1.3514. Next target is 1.2736 fibonacci level. EUR/GBP defended 0.8762 key support and rebounded strongly. Further rise should be seen back towards 0.8537/8595 resistance zone. USD/CHF continues to lose upside momentum just ahead of 0.9851 fibonacci level. The next move, a break of the fibonacci resistance or rejection from there, could depend on whether EUR/CHF could get rid of 1.0608 temporary low.

In Europe, currently, FTSE is down -0.02%. DAX is down -0.25%. CAC is down -0.30%. German 10-year yield is down -0.0143 to -0.430. Earlier in Asia, Nikkei rose 0.34%. Hong Kong HSI dropped -0.17%. China Shanghai SSE rose 1.84%. Singapore Strait Times dropped -0.47%.

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Philly Fed manufacturing index rose to 36.7, highest since Feb 2017

Philadelphia Fed manufacturing outlook index rose to 36.7 in February, up from 17, beat expectation of 12. That’s also the highest reading since February 2017. Current indicators for general activity, new orders, and shipments increased this month, suggesting more widespread growth. Future indexes also showed improvement, indicating continuation of growth in the next six months.

Initial jobless claims rose 4k to 210k in the week ending February 15, matched expectations. Four-week moving average dropped -3.25k to 209k. Continuing claims rose 25k to 1.726m in the week ending February 8. Four-week moving average of continuing claims dropped -5.25k to 1.772m.

From Canada, ADP employment grew 25.9k in January. New housing price index rose 0.0% mom.

ECB: Sept easing package gradually transmitted to the economy

In the accounts of ECB January 22-23 meeting, it’s noted that the package of stimulus measures announced last September “have lowered term premia and contributed to the overall substantial easing in financial conditions.” There were also “indications” that the package was “being gradually transmitted to the economy”.

“Market sentiment had turned positive and risk appetite among market participants seemed strong.” Additionally, “uncertainties were perceived as receding”, mainly due to US-China trade deal and stabilization in economy outlook. But monetary policy “had to remain highly accommodative for a prolonged period of time”, with inflation “still far away” from target, and “robust convergence” of inflation towards target was “not yet assured”.

Meanwhile, “risks remained tilted to the downside” even though they had become “less pronounced”. Also, “it was cautioned that a more optimistic outlook for the economy needed to be communicated carefully in order not to give rise to a premature tightening of financial conditions.”

ECB de Guindos: Eurozone underlying fundamentals for moderate expansion remain in place

ECB Vice President Luis de Guindos said today that “the underlying fundamentals for a continued though moderate expansion of the euro area economy remain in place, as foreseen in the December 2019 Eurosystem staff projections.” However, “risks surrounding the euro area remain tilted to the downside.. In particular, the outbreak of the coronavirus and its potential effect on global growth add a new